Congratulations, the offer you made on the home of your dreams has been accepted! Time to celebrate, right? Well, not so fast, unfortunately. While your purchase offer being accepted is a major step, there are still some hurdles you’ll have to overcome during the escrow period (these obstacles will vary based on your state). Read on to learn more about the 4 most common issues you could encounter.
Sometimes, you’ll put an offer on a home with the idea that nothing will get in your way, and everything is sound on both you and the seller’s part. Sadly, you could face issues like a lien on the home or a claim against the property.
To provide protection against these issues, both lenders and buyers obtain title insurance issued by a title company. Title insurance covers issues like fraud, liens, forgery, or judgments against the property.
In order to issue a title insurance policy, a title company will perform a title search. A title search examines public records to ensure that no one besides the seller has a claim to the property you are trying to purchase.
Ultimately, before the transaction can move forward, any issues with the title must be resolved.
You Can’t Get Homeowners Insurance
Insurance records will reveal if there have been any major insurance claims on the home like water or mold damage. If the issues are prominent or consistent, any insurance company may deny you coverage on the home because it is considered too risky.
If this happens, the only way you’ll be able to purchase the home is with cash, which could ruin everything if you were planning to finance your purchase.
Financing Falls Through
Major rule: Always get preapproval from a bank with a written loan commitment stating they will provide a mortgage for the amount of the home you’re wanting to purchase.
Unfortunately, there are issues that could prevent your loan from closing like a false statement on the application, a lost job, a sharp credit decrease, or skyrocketing interest rates.
To help prevent these problems from occurring, speak to your lender so that you know what to do and what not to do during the process.
Defects Revealed During Home Inspection
Before putting in your purchase offer, talk to your realtor about having a home inspection contingency written in. That way, if there are any major issues revealed during the inspection, you have options at your disposal.
If you fail to have a home inspection contingency written into your contract and you want to back out after seeing the problems, you could very well lose your earnest money (a.k.a. Your good faith deposit that shows you’ll be purchasing the home).
If the damage isn’t enough to turn you away from the home, the process could still inevitably affect your closing due to negotiations on how the home will be repaired.
Heights Title Can Help
We understand that closing can be stressful and that you want everything to run smoothly. Heights Title is dedicated to helping you understand the process and any potential issues involved.
This material is provided as a courtesy and for educational purposes only. Please consult your title professional for specific information regarding your situation.